IBM and Business Partners Realize Significant Growth on the Mainframe and Linux

IBM (NYSE: IBM) today announced a mainframe milestone as more than 390 IBM business partners now offer nearly 1,000 applications for System z customers running Linux, a 100 percent increase over the last year. IBM recently reported a 30 percent year-to-year growth of mainframe customers running Linux and this surge is giving IBM's channel partners the opportunity to capitalize on the mainframe's continued growth.

This increase in Linux application development for the mainframe is being driven by a number of factors, including the overwhelming acceptance of partitioned Linux virtual servers -- and the associated great price and performance -- which is driving new workloads on System z.

In addition, IBM Business Partners are reporting customer interest in new IBM technology including the z9 Integrated Information Processor (zIIP) and z Application Assistant Processor (zAAP) specialty engines. More than 60 percent of IBM mainframe revenue is now driven by new workloads, with approximately 20 percent of revenue and 30 percent of MIPS (million instructions per second) coming from Linux customers. This demand paves the way for independent software vendors looking to capitalize on the combined strengths of Linux and the mainframe.

IBM has also seen a significant increase in the number of venture-backed software companies using the mainframe. In fact, the number of start-ups using the IBM mainframe has tripled in the past two years.

"Mainframe strengths including computing power, security and scalability led to a 25 percent jump in hardware revenue in the third quarter of this year," said Buell Duncan, general manager of ISV and Developer Relations, IBM. "But this success is not ours alone. Our valued business partners are reaping the benefits as companies are looking for new, powerful solutions running on System z."

In addition, several independent software vendors (ISVs) and systems integrators (SIs) around the world are realizing double-digit growth for software applications and support for System z. Some of the ISVs and SIs offering these solutions and benefiting from the mainframe's continued momentum include:

-- San Antonio-based Sirius Computer Solutions, an IBM Premier Business Partner and provider of advanced infrastructure solutions, has seen System z sales grow 34 percent in the last year and had their best System z sales volume ever.

-- Omaha-based MSI Systems Integrators, an IBM Premier Business Partner and solution provider of hardware, software and services, bought 44 percent more System z hardware from IBM on behalf of their clients when comparing third quarter 2006 to third quarter 2005. For the 4th quarter, they are expecting growth in the System z business between 75 and 150 percent over 2005.

-- Toronto-based Glass House Systems, an IBM Premier Business Partner providing infrastructure expertise specializing in IBM servers, software systems, SAN and high-end storage subsystems, is forecasting 25 percent year-over-year revenue growth in System z sales primarily due to increasing momentum of new workloads.

"With the modernized capabilities of the mainframe, we're increasingly looking at start-ups that are developing their offerings to take advantage of the system's security, combined with advantageous data center simplification and interoperability," said Mike Gurevich, technology advisor of FTVentures, a private equity firm focused on services and software companies and also a strategic partner of IBM Venture Capital Group.

"Our portfolio company Nexxar recently implemented an IBM mainframe z9 server platform that is integrated with an open source client platform," said Gurevich. "Based on a single code, the integrated solution has significantly streamlined the start up's IT maintenance. The z9 has reduced 75 percent of the head count required to maintain the data center while the interoperability of z9 with open source has further simplified development and quality assurance efforts of the re-usable code, a significant cost savings for Nexxar. In addition, the z9 easily scales up as the company grows."

Customers appreciate the cost benefits and flexibility of Linux, coupled with the unparalleled security and scalability properties of the mainframe. As a result, IBM has made an effort to support ISVs and application developers to foster the growth of Linux on System z with technical support in 33 IBM Innovation Centers worldwide. These resources and benefits are all part of IBM's PartnerWorld program, which was just named the leading worldwide partner program by analyst firm IDC.

"Our goal to help companies position their IT environment as the change agent that makes them more competitive is strengthened by IBM's System z," said Harvey Najim, President and CEO, Sirius Computer Solutions, Inc. "We focus on preserving IT investments in mainframe solutions, taking advantage of the platforms' core strengths and enabling on demand features such as virtualization that help companies respond to customer demands and market opportunities."

Earlier this year, IBM announced Systems z for ISVs, a new worldwide initiative that provides software vendors with technical, sales and marketing resources to build applications that run on IBM middleware, including WebSphere Application Server and DB2, and System z. The initiative, offered through IBM's PartnerWorld Industry Networks, starts by providing ISVs with no-cost consulting sessions with IBM IT architects. IBM then creates a customized online environment where vendors can develop, port and test applications on System z, with IBM consultants supporting the ISVs throughout development and porting.

System z, the flagship for IBM Systems innovation and the hub of the infrastructure, provides an advanced combination of security and resiliency features to enterprises that require high levels of application availability and information processing, and the capability to reallocate resources on the fly to match changing business priorities. System z leadership in virtualization, storage connectivity, Linux, mixed workloads, and service oriented architectures (SOA) means that customers migrating to an IBM mainframe can realize compelling levels of value, help reduce total cost of ownership, and enhance overall workload performance. Other compelling System z mainframe attributes include specialty processors that help reduce IBM software usage costs and accelerate workload execution as well as industry leading security certifications.

IDC recently announced that IBM held 37.1 percent revenue share of high-end enterprise server sales in the third quarter of 2006.

For more information about IBM partner programs, visit http://www.ibm.com/partnerworld